India's Reliance Industries enters retail business

dpa German Press Agency
Published: Friday November 3, 2006

New Delhi- India's largest petrochemical firm Reliance Industries Limited (RIL) entered the country's retail market Friday with 11 pilot stores selling fresh fruits, vegetables and grocery items in the southern city of Hyderabad. The 5.6-billion-US-dollar initiative by RIL group company Reliance Retail Limited is to be followed up with rapid expansion across the country, PTI news agency reported.

Reliance Fresh, as the stores are called, are the front-end of RIL's larger agricultural initiative that involves setting up of farm product sourcing centres and supply chains as well as retail outlets.

The Hyderabad outlets would be followed by a rollout of a nationwide chain of supermarkets, discount, departments, convenience and speciality stores.

The RIL Board approved an investment of more than 5.6 billion US dollars in the venture earlier this year.

Reliance plans to open retail outlets in 784 cities along with 6,000 rural centres by 2010.

International management consultant AT Kearney recently estimated India's total retail market at 202.6 billion US dollars which is expected to grow at a compounded 30 per cent over the next five years.

More than 90 per cent of the sector is unorganized and dominated by small and medium traders.

"We are not harming small retail players. The market is growing by 8 per cent, which is 24-25 billion US dollars every year. We are aiming at revenues of only 25 billion US dollars in four years," RIL president Raghu Pillai was quoted as saying by IANS news agency.

The potential of the retail market in a country with a population of over 1 billion and a growing moneyed middle class makes it an attractive destination for foreign retailers.

The Indian government, however, has been reluctant to open the sector to foreign direct investment.

Currently only single brand foreign players can enter the retail market. Retail chains such as WalMart can only operate through franchises with Indian companies.

© 2006 dpa German Press Agency